The Assumption of Flexible Prices Is a More Plausible Assumption

question 58

Multiple Choice

The assumption of flexible prices is a more plausible assumption when applied to price changes that occur:

• A) from minute to minute.
• B) from year to year.
• C) in the long run.
• D) in the short run.

Recognize the impact of changes in fair value on the reporting of available-for-sale and trading securities.

Learn the specific accounting treatments for unrealized gains and losses on securities.

Understand the procedures for consolidating financial statements for a parent company and its subsidiary.

Know how management's intent affects the classification of securities as either long-term or short-term.

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Definitions:

Threat

An expression of an intention to inflict pain, injury, damage, or other hostile action on someone in retribution for something done or not done.

Fraud

A wrongful or criminal deception intended to result in financial or personal gain.

Misrepresentation

The action or offense of giving a false or misleading statement about a material fact, often with the intent to deceive.

Fraudulent Misrepresentation

A false statement made to induce another party to enter into a contract, resulting in harm or loss.